Race Horse Cost Recover Act and Equine Tax Parity Act Introduced

On October 1, 2015 Congressman Andy Barr (R-KY) re-introduced the Race Horse Cost Recover Act (H.R. 3671) and Equine Tax Parity Act (H.R. 3672). The Race Horse Cost Recover Act would permanently place all race horses in the three-year category for tax depreciation purposes. A 2008 provision that temporarily put race horses in the three year category expired at the end of 2014. The Equine Tax Parity Act would make horses eligible for capital gains treatment after 12 months, rather than 24, similar to other business assets.

Race Horse Cost Recover Act

The 2008 Farm Bill included language that allowed all race horses to be depreciated over three years, regardless of their age when placed in service. Prior to then, race horses were depreciated over seven years if placed in service before they turned two. Horses placed in service after two (24 months from foaling date), could be depreciated over three years. A horse is generally deemed to be placed in service when it begins training, which is usually at the end of its yearling year. This change to the tax code was set to “sunset” at the end of 2013, but was extended until the end of 2014. The Race Horse Cost Recover Act would permanently make all race horses eligible for three year depreciation.

In July the Senate Finance Committee approved a tax extender bill that included a two year extension of this provision, but there has been no further action on the bill.

Depreciation is a means of recovering the cost of property, including horses, used in a business through deductions of portions of the horse’s cost over a period of years. Generally, the recovery period approximates the estimated useful life or economic life of the property. The horse industry believes a three year deprecation schedule more accurately reflects the actual time a horse will be raced and a seven year deprecation period unfairly penalizes the horse industry.

Permanently placing all race horses in the three year depreciation category would be of great benefit to the horse industry.

Equine Tax Parity Act

The Equine Tax Parity Act (H.R. 3672) would make horses eligible for capital gains treatment after 12 months, rather than 24, similar to other business assets.

Under the current federal tax code, gains from sales by individuals of property used in a trade or business, including horses, qualify for long-term capital gains and are subject to the maximum capital gains tax rate of 15% for taxpayers earning less than $450,000 or 20% for those earning more. Since the individual income tax rate can go as high as 39.6%, the lower rate is a real advantage.

Horses held for breeding, racing, showing or draft purposes qualify for the capital gains rates only if they are held for 24 months. All other business assets (except cattle) qualify if held for 12 months.

The Equine Tax Parity Act would end this discriminatory treatment of horses under the tax code and allow horse owners to enjoy the reduced rate upon sale after holding a horse for 12 months. For most owners and breeders shortening the capital gains holding period to 12 months should be a benefit. Reducing the holding period by half would give many horse owners and breeders more flexibility to sell and market their horses. It would mean that every sale of a horse which is held for at least 12 months will qualify as a capital gain or loss unless that horse is held primarily for sale.

Recreational Trails Program in Senate Highway Bill

On July 30, the Senate passed its version of a multi-year national highway bill, called the DRIVE Act. The bill would reauthorize the Federal Highway Administration’s Recreational Trails Program (RTP).

An amendment by Senator Mike Lee (R-UT) was filed that would have eliminated the Transportation Alternatives Program, which includes the Recreational Trails Program. However, this amendment was not considered and the RTP program will continue un- changed if this bill becomes law.

Grassroots support from recreational trail users, including equestrians played an important role in making sure RTP was included in the Senate-passed bill. The AHC appreciates all the individual horsemen and organizations that contacted their Senators in support of RTP.

Since its inception RTP has provided money for thousands of state and local trail projects across the country, including many that benefit equestrians. RTP provides funding directly to the states for recreational trails and trail-related facilities for all recreational trail users. It is funded with a portion of the gas taxes paid into the Highway Trust Fund by recreational off-highway vehicle users.

For now, because of disagreements over funding a multi-year highway bill, the House of Representatives is unlikely to consider the Senate Passed DRIVE Act.

In the meantime the Congress has passed a 3 mouth extension of the current highway bill, which includes the RTP program.

If you have any questions, please contact the AHC.

Bill to Allow State and Tribal Management of Wild Horses Introduced

On July 22, 2015, Congressman Chris Stewart (R-Utah) re-introduced the Wild Horse Oversight Act (H.R. 3172) and Senator Orrin Hatch (R-Utah) introduced a Senate version of the bill (S. 1845). The bills would amend the Wild Free-Roaming Horses and Burros Act to allow states and Indian tribes to assume the management and protection of wild horses and burros.

The bills would allow a state or federally recognized Indian tribe to assume all management and protection functions of wild horses and burros within its borders, if requested by the legislature or Governor of a State, or the governing body of an Indian tribe. Currently, the federal land management agencies, primarily the Bureau of Land Management, are responsible for overseeing the wild horse and burro population. The bills would not alter any of the protections for wild horses under the Wild Free-Roaming Horses and Burros Act and the federal land management agencies would continue to be responsible for tracking the number of wild horses and burros even if a state or tribe assumed management of its wild horses.

The House bill has been referred to the House Committee on Natural Resources and the Senate bill has been referred to the Senate Committee on Energy and Natural Resources.

Legislation to Eliminate Soring Introduced in the House

On July 28, 2015, Representatives Ted Yoho (R-FL) and Kurt Schrader (D-OR) re- introduced the Prevent All Soring Tactics Act of 2015 (HR 3268) (PAST act) in the House of Representatives. The bill is intended to strengthen the Horse Protection Act (HPA) and prevent the soring of Tennessee Walking Horses, Racking Horses, and Spotted Saddle Horses. The Senate version of the bill was introduced by Senators Kelly Ayotte (R-NH) and Mark Warner (D-VA) earlier this year. The bill is supported by the American Horse Council and most national horse show organizations.

Soring is an abusive practice used by some to train Tennessee Walking Horses, Spotted Saddle Horses, and Racking Horses. It usually involves the use of action devices, chemicals, pads, wedges or other practices to cause pain in the horse’s forelegs and produce an accentuated show gait for competition. Despite the existence of a federal ban on soring for over forty years, this cruel practice continues in some segments of the walking horse industry.

The PAST act would amend the HPA to prohibit a Tennessee Walking Horse, a Racking Horse, or a Spotted Saddle Horse from being shown, exhibited, or auctioned with an “action device,” or “a weighted shoe, pad, wedge, hoof band or other device or material” if it is constructed to artificially alter the gait of the horse and is not strictly protective or therapeutic. These new prohibitions would not apply to other breeds that do not have a history of soring.

The legislation would also increase fines and penalties for violations, including the potential for a lifetime ban for repeat offenders.

The bill would create a new licensing process for horse show inspectors, eliminating the current often criticized designated qualified persons (DQPs) program. The bill would require the U.S. Department of Agriculture to train, license and appoint new independent inspectors for shows and other HPA-regulated activities that wish to hire an inspector. Licensed or accredited veterinarians would be given preference for these positions. The decision to hire and cost of an inspector would still reside with the management of a show, sale or auction.

Many national horse show organizations have endorsed the PAST Act including:

  • The American Horse Council
  • The American Quarter Horse Association
  • The American Association of Equine Practitioners
  • The American Paint Horse Association
  • The U.S. Equestrian Federation
  • The American Morgan Horse Association
  • The Pinto Horse Association of America
  • The Arabian Horse Association
  • The American Saddlebred Horse Association
  • The United Professional Horsemen’s Association
  • The Appaloosa Horse Club

Many state and local horse organizations also support the bill. The bill has broad bipartisan support and already has over 100 co-sponsors.

Various efforts have been made since enactment of the HPA forty years ago to stop the soring of horses and they have not worked. This bill is focused on the problem it is intended to solve and does not adversely affect other segments of the show industry that are not soring horses and have no history of soring horses.

The AHC supports the bill and urges all members of the horse industry to contact their Representative and ask them to support the bill and become a co-sponsor.

ACTION ALERT- Support for the Recreational Trails Program is Needed Now!

The Senate has begun to debate its version of a multi-year national highway bill, called the Drive Act. The bill would reauthorize the Federal Highway Administration’s Recreational Trails Program (RTP).

However, Senator Mike Lee (R-UT) has filed an amendment (S.A. 2280) to the bill that would eliminate the Transportation Alternatives Program, which includes the Recreational Trails Program. The horse industry benefits greatly from this program. The Senate could vote on this amendment as early as this weekend.

The American Horse Council urges all recreational riders and trail users to call their Senators and ask them to oppose the Lee amendment S.A. 2280 or any amendment that would eliminate the Recreational Trails Program.

Since its inception RTP has provided money for thousands of state and local trail projects across the country, including many that benefit equestrians. RTP provides funding directly to the states for recreational trails and trail-related facilities for all recreational trail users. It is funded with a portion of the gas taxes paid into the Highway Trust Fund by recreational off-highway vehicle users.

You can reach your Senators by calling the Congressional switchboard at (202) 225-3121. Ask for your Senators’ office and then ask to speak to the staff person who handles transportation issues.

Call them as soon as possible and tell them;

  • You support the Recreational Trails Program and it is important to trail riders in your state.
  • Please oppose the Lee amendment (S.A. 2280) to the DRIVE Act that would eliminate the RTP program.
  • Tell them RTP is a very effective, user-pay/user-benefit program and a proven success story. It serves as the foundation for state trail programs across the country, facilitates healthy outdoor recreation, and helps spur economic activity in countless communities.


Recreational Organizations– Please share this with your members.

If you have any questions please contact the AHC.

Third Bill Introduced to Regulate Racing Medication

The Thoroughbred Horseracing Integrity Act of 2015 (H.R. 3084) was introduced on July 16, 2015. This is the third bill introduced in this Congress to regulate horseracing at the federal level. The bill was introduced by Representatives Andy Barr (R-KY) and Paul Tonko (D-NY) and referred to the House Energy and Commerce Committee, on which Mr. Tonko sits. The bill applies only to Thoroughbred racing. To review a copy of the bill please click here: https://www.horsecouncil.org/thoroughbred-horseracing-integrity-act-2015-hr-3084

The bill would:

  • Authorize the U.S. Anti-Doping Agency (USADA) to organize an independent anti-doping authority to be in charge of the use of drugs, medications and other practices in Thoroughbred horseracing.
  • Designate that organization as the Thoroughbred Horseracing Anti-Doping Authority (THADA or the Authority), which will be composed of eleven members, including the chief operating officer of USADA, five individuals representing USADA, and five individuals appointed by USADA from the Thoroughbred industry. USADA has discretion in making these appointments.
  • Give THADA the authority to draft, adopt and enforce regulations applicable to racing with respect to medications and other practices in Thoroughbred racing.
  • Require all sectors of Thoroughbred racing to recognize the anti-doping oversight authority by THADA as a condition precedent to participating in interstate simulcasting, Internet wagering on horseracing, and interstate common pool wagering under the Interstate Horseracing Act (IHA). The bill would not directly amend or change the structure of the consents currently required in the IHA for interstate wagering.
  • Require the racing industry to bear the costs of programs initiated by the Authority and enforcement.

The findings to the bill note that “because the various states have been unable to adopt a national uniform anti-doping program” for Thoroughbred racing, this legislation provides that “such rules, procedures and enforcement policies should be implemented, consistent with internationally accepted best practices, by an independent anti-doping organization authorized by an act of Congress.” The legislation designates THADA as the organization and gives USADA the authority to organize this independent authority.

THADA will develop and administer the anti-doping program for Thoroughbred racing. The program will become effective January 1, 2017. THADA’s anti-doping program will apply to all Thoroughbred races subject to an interstate off-track wager under the IHA and to owners, trainers, veterinarians, etc. who race horses in such races.

While the bill would not explicitly amend the IHA, THADA’s jurisdiction and authority over all involved in interstate Thoroughbred wagering would be made a condition precedent to the privilege to accept, receive, or transmit wagers on races subject to the IHA.

Composition of THADA

THADA will be a non-profit corporation initially governed by a board composed of (1) USADA’s chief executive officer; (2) five USADA board members; and (3) five individuals from different constituencies in the Thoroughbred industry, who shall be appointed by USADA.

Authority and Powers of THADA

After opportunity for industry and public comment, the Authority shall develop and administer the anti-doping program, which shall include, among other things:

  1. Lists of permitted and prohibited substances and practices;
  2. Schedule of sanctions, including a lifetime ban from horseracing; and
  3. Laboratory standards for accreditation and testing requirements, procedures, and protocols.
  4. Effective Date

The anti-doping program shall take effect on January 1, 2017. The Authority and state racing commissions shall work together with respect to doping conduct, sanctions, and investigations prior to that date. All rules called for in the bill shall be in place 120 days prior to January 1, 2017. All rules shall be subject to industry and public comment before being adopted.

Funding

The bill does not provide for any federal funding to set up the Authority and anti-doping program or its subsequent operation. Funds for the establishment and administration of the anti-doping program shall be paid entirely by the Thoroughbred racing industry.

Equine Tax Benefits in Senate Tax Extender Bill

Yesterday the Senate Finance Committee reported out legislation to extend retroactively a number of tax provisions, including those supported by the American Horse Council.

The bill would extend several tax provisions favorable to horse owners, breeders, and equine businesses that expired or were reduced at the end of 2014. These include the three-year depreciation for all race horses, regardless of their age when placed in service.

The bill would extend these various provisions for two years, retroactive to January 1, 2015. This means eligible equine assets, including horses, purchased and/or placed in service at any time in 2015 and 2016 would be eligible for the benefits described hereafter.

Depreciation of Race Horses. From 2009 through 2014 all race horses were depreciated over three years, regardless of their age when they were placed in service. This provision was passed in 2008 through the efforts of Majority Leader Mitch McConnell (R-KY). This change, which eliminated the 7-year depreciation period for race horses, expired at the end of 2014.

The Senate bill would extend the three-year recovery period for all race horses placed in service during 2015 and 2016, regardless of age.

179 Expense Deduction. For the last few years, the so-called Section 179 business expense deduction was set at $500,000. This meant that anyone in the horse business could immediately depreciate up to $500,000 of the cost of any investment in business assets, including horses. The deduction was reduced dollar-for-dollar once investment in all one’s business activities hit $2 million.

This provision was not extended by Congress and has reverted to $25,000 for 2015.

The Senate bill would extend the expense deduction at $500,000, with a phase-out at $2 million, for assets, including horses, purchased and placed in service during 2015 and 2016.

Bonus Depreciation. Anyone in the horse business could depreciate up to 50% of the cost of new property purchased and placed in service in 2014, including horses and other equipment. This is known as “bonus depreciation.” It was restricted to new assets, which meant that the first use of the horse or other property had to begin with the taxpayer.

This provision was not extended by Congress and has expired for 2015.

The Senate bill would extend bonus depreciation at 50% for the cost of new assets purchased and placed in service during 2015 and 2016.

Conservation Easements. Favorable rules for contributions by farmers and ranchers of capital gain real property for conservation easements, allowing a deduction of up to 100% of the donor’s contribution base, expired for 2015.

The Senate bill would extend for 2015 and 2016 the enhanced deduction involving conservation easements.

In the last Congress all of these provisions were extended, but at the last minute, almost a year after they had expired or been reduced. This made it difficult for individuals, including horse owners and breeders, to plan and take advantage of them. In reporting out the tax extenders package yesterday, Finance Committee Chair Orrin Hatch (R-UT) noted this and said “All of these provisions are meant to be incentives – they are meant to encourage and promote certain activities. If they are expired, they aren’t doing much good. That being the case, we need to move this package forward as soon as possible.”

The Senate tax extender bill must now go to the full Senate for approval and the House of Representatives.

Senate Appropriations Committee Approves Horse Slaughter Amendment

On July 16, 2015, the Senate Appropriations Committee approved its version of the FY2016 Agriculture Appropriations bill. This bill provides funding for the U.S. Department of Agriculture (USDA) for the 2016 fiscal year (October 1, 2015 through September 30, 2016). An amendment was adopted by the committee during mark-up of the bill that would prohibit funding for USDA inspections atU.S.horse slaughter facilities.

During full committee mark-up of the bill Senator Tom Udall (D-NM) offered an amendment to prohibit funding for USDA inspections at U.S. horse slaughter facilities. Such a prohibition would prevent horse slaughter facilities from operating in theU.S.This amendment passed by a voice vote.

A similar amendment was offered by Congressman Sam Farr (D-CA) when the House Appropriation Committee marked-up the House version of the bill on July 8. That amendment was defeated in a 24-24 vote.

Because this amendment is not in both the House and Senate versions of the bill its inclusion in any final bill that is eventually passed will be determined during a Conference Committee that will reconcile the differences between the House and Senate versions of the bill.

Currently, No horse slaughter facilities are operating in the U.S and a prohibition on funding for inspectors at such facilities from last year’s FY 2015 USDA bill remains in effect until September 30, 2015. If that prohibition expires, USDA will be required to provide inspectors and horse slaughter facilities if any were to open.

Both the full Senate and House must now debate and approve their respective versions of the bill.

AHC ACTION ALERT- Support National Forest Trails Bill Today

On Thursday, July 16, the Senate Agriculture Committee is scheduled to hold a hearing on the National Forest Service Trail Stewardship Act of 2015 (S.1110). The bill would direct the Forest Service to take several actions to help address the current trail maintenance backlog that is adversely impacting all trail users on many national forests, including equestrians. This bill is strongly supported by the American Horse Council.

AHC urges all recreational riders and trail users to call their Senators and ask them to support the National Forest Service Trail Stewardship Act of 2015 (S.1110) and to please co-sponsor this legislation.

You can reach your Senator through the Capitol Switchboard at 202-225-3121. Once connected to the Senator’s office, ask to speak to the staff person who handles public lands issues.

Call them today and tell them;

  • You support the National Forest Service Trail Stewardship Act of 2015 (S.1110) and it is important to trail riders and all recreational trail users in your state.
  • The Forest Service has deferred trail maintenance needs that exceed half-billion dollars. This maintenance backlog is causing access and safety issues for equestrians and all trail users on national forests.
  • S. 1110 will direct the Forest Service to develop a strategy to more effectively utilize volunteers and partners to assist in maintaining national forest trails and identify and prioritize specific areas with the greatest need for trail maintenance in the national forest system.
  • This bill will help improve trail maintenance without adding to the federal budget deficit.
  • The bill is bi-partisan and supported by a wide range of recreational users of public land.
  • Please support and co-sponsor this important legislation.

If you have any questions please contact the AHC.

House Committee Approves USDA Appropriations Bill

On July 8, 2015, the House Appropriations Committee approved its version of the FY 2016 Agriculture Appropriations bill. This bill provides funding for the U.S. Department of Agriculture (USDA) for the 2016 fiscal year (October 1, 2015 through September 30, 2016). The bill contains several provisions that impact the horse industry, including funding for USDA equine health activities and enforcement of the Horse Protection Act.

FY 2016 House USDA Appropriations

Animal and Plant Health Inspection Service and Equine Health

The bill would provide $871 million for the Animal and Plant Health Inspection Service (APHIS). APHIS is the USDA agency responsible for protecting and promoting U.S. agricultural health, including responding to contagious equine disease outbreaks. Funding for Equine, Cervid, and Small Rumiant health would be set at $19.5 million, this is the same amount that was appropriated in FY 2015.

Horse Slaughter

Congressman Sam Farr (D-CA) offered an amendment to prohibit funding for USDA inspections at U.S. horse slaughter facilities that was defeated in a 24-24 vote. Congressman Robert Aderholt (R-AL) spoke in opposition to the amendment. Such a prohibition would have prevented horse slaughter facilities from operating in the U.S. had it been included in the bill.

Currently, No horse slaughter facilities are operating in the U.S and a prohibition on funding for inspectors at such facilities from last year’s FY 2015 USDA bill remains in effect until September 30, 2015. Once that prohibition expires, USDA will be required to provide inspectors and horse slaughter facilities if any were to open.

A similar defunding amendment could still be offered when the bill is debated by the full House or when the Senate begins work on their version of the USDA appropriations bill.

Horse Protection Act

The bill provides $697,000 for enforcement of the Horse Protection Act. This is the same amount that was appropriated in FY 2015.

The bill must now be approved by the full House.

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